SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended    April 30, 1998
                                 ----------------

Commission file number     0-11254
                          ---------

                                 COPYTELE, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


            Delaware                                           11-2622630
--------------------------------                       -------------------------
(State or other jurisdiction of                            (I.R.S. employer
 incorporation or organization)                            identification no.)


      900 Walt Whitman Road
      Huntington Station, NY                                       11746
--------------------------------------------------------------------------------
(Address of principal executive offices)                        (Zip Code)


                                 (516) 549-5900
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)


         Indicate  by check  mark  whether  the  registrant:  (1) has  filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.


                                 Yes  X           No
                                     ---             ---




         Indicate  the  number of  shares  outstanding  of each of the  issuer's
classes of common stock, as of the latest practicable date.

Number of shares of common stock, par value
$.01 per share, outstanding as of June 5, 1998:                57,871,176 shares
                                                              ------------------




<PAGE>


                                TABLE OF CONTENTS
                                -----------------


Part I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Balance Sheets  (Unaudited) as of April 30, 1998 and 
         October 31, 1997

         Condensed Statements of Operations (Unaudited) for the six months ended
         April 30, 1998 and April 30, 1997,  and for the period from November 5,
         1982 (Inception) through April 30, 1998

         Condensed  Statements  of Operations  (Unaudited)  for the three months
         ended April 30, 1998 and April 30, 1997

         Condensed Statement of Shareholders'  Equity (Unaudited) for the period
         from November 5, 1982 (Inception) through April 30, 1998

         Condensed Statements of Cash Flows (Unaudited) for the six months ended
         April 30, 1998 and April 30, 1997,  and for the period from November 5,
         1982 (Inception) through April 30, 1998

         Condensed  Statements  of Cash Flows  (Unaudited)  for the three months
         ended April 30, 1998 and April 30, 1997

         Notes to Condensed Financial Statements (Unaudited)

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Part II. OTHER INFORMATION

Item 6.  Exhibits and Reports on Form 8-K

         Signatures


                                       2


<PAGE>                              


                         Part I - FINANCIAL INFORMATION
                         ------------------------------

Item 1. Financial Statements
        --------------------
<TABLE>
<CAPTION>

                                                COPYTELE, INC.
                                                --------------
                                        (Development Stage Enterprise)
                                        ------------------------------
                                     CONDENSED BALANCE SHEETS (UNAUDITED)
                                     ------------------------------------


                                                                                                 April 30,              October 31,
                                          ASSETS                                                   1998                     1997
                                          ------                                               -----------               -----------
<S>                                                                                        <C>                        <C>    

CURRENT ASSETS:
  Cash (including cash equivalents and interest bearing accounts of
    $7,895,195 and $11,977,526, respectively)                                                   $7,957,329              $12,329,171
  Marketable securities, at amortized cost                                                         975,561                  997,173
  Accrued interest receivable                                                                       10,822                   18,429
  Prepaid expenses and other current assets (including amounts due from
    Joint Venture of approximately $4,935,000 and $4,304,000, respectively)                      5,883,194                4,853,459
                                                                                               -----------              ------------
                                                                                                14,826,906               18,198,232

PROPERTY AND EQUIPMENT (net of accumulated depreciation
  and amortization of $1,209,884  and $1,062,949, respectively)                                    873,902                  947,643
INVESTMENT IN JOINT VENTURE (Note  2)                                                              515,785                  723,166
OTHER ASSETS                                                                                       104,877                  119,166
DEFERRED TAX BENEFITS (net of valuation allowance of $29,759,000
  and $28,295,000, respectively)                                                                      -                        -
                                                                                             -------------             -------------
                                                                                               $16,321,470              $19,988,207
                                                                                             ==============            =============

                           LIABILITIES AND SHAREHOLDERS' EQUITY
                           ------------------------------------

CURRENT LIABILITIES:
  Accounts payable and accrued liabilities                                                      $1,114,515               $1,209,065
                                                                                             --------------            -------------

SHAREHOLDERS' EQUITY:
  Preferred stock, par value $100 per share; authorized 500,000 shares;
    no shares outstanding                                                                             -                        -
  Common stock, par value $.01 per share; authorized 240,000,000 shares;
   57,861,176  shares outstanding                                                                  578,612                  578,612
  Additional paid-in capital                                                                    52,939,185               52,759,485
  Accumulated (deficit) during development stage                                               (38,310,842)             (34,558,955)
                                                                                             --------------          ---------------
                                                                                                15,206,955               18,779,142
                                                                                             --------------          ---------------
                                                                                               $16,321,470              $19,988,207
                                                                                             ==============          ===============


</TABLE>

     The  accompanying notes to condensed  financial  statements are an integral
part of these balance sheets.

                                       3
<PAGE>

<TABLE>
<CAPTION>
                                                           COPYTELE, INC.
                                                           --------------
                                                   (Development Stage Enterprise)
                                                   ------------------------------
                                           CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
                                           ----------------------------------------------

                                                                                                               
                                                                                                                For the period from 
                                                                 For the six months                                November 5,1982  
                                                                  ended April 30,                                    (inception)    
                                                  -------------------------------------------------                    through
                                                          1998                         1997                          April 30, 1998
                                                      ------------                 ------------                 -------------------

<S>                                             <C>                            <C>                             <C>   

SALES                                               $        -                     $      -                          $       -


SELLING, GENERAL AND ADMINISTRATIVE
  EXPENSES, (including research and
  development expenses of approximately
  $2,106,000, $2,021,000 and
  $26,491,000, respectively)                             3,833,273                   3,337,796                           42,191,850
                                                     --------------              --------------                     ----------------
                                                            

LOSS FROM JOINT VENTURE                                    207,381                     157,913                              709,215
                                                     --------------              --------------                     ----------------

INTEREST INCOME                                            288,767                     514,284                            4,590,223
                                                     --------------              --------------                     ----------------


NET (LOSS)                                             ($3,751,887)                ($2,981,425)                        ($38,310,842)
                                                     ==============              ==============                     ================


NET (LOSS) PER SHARE OF COMMON STOCK                        ($0.06)                     ($0.05)                              ($0.83)
                                                     ==============              ==============                     ================
                                                       


WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING           57,861,176                  57,535,605                           46,282,567
                                                     ==============              ==============                     ================

</TABLE>
                                                       
     The  accompanying notes to condensed  financial  statements are an integral
part of these statements.



                                       4

<PAGE>
<TABLE>
<CAPTION>

                                                           COPYTELE, INC.
                                                           --------------
                                                   (Development Stage Enterprise)
                                                   ------------------------------
                                           CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
                                           ----------------------------------------------

                                                           For the three months
                                                              ended April 30,
                                                       ----------------------------

                                                          1998                 1997
                                                     --------------        --------------

<S>                                               <C>                 <C>    

SALES                                                $       -            $       -


SELLING, GENERAL AND ADMINISTRATIVE   
EXPENSES, (including research  and 
development expenses of approximately                     
$1,006,000 and $1,123,000, respectively)                 1,874,876             1,775,292    
                                                    ---------------        --------------
                                                    
LOSS FROM JOINT VENTURE                                     70,802                88,896
                                                    ---------------        --------------

INTEREST INCOME                                            130,617               253,208
                                                    ---------------        --------------


NET (LOSS)                                             ($1,815,061)          ($1,610,980)
                                                    ===============        ==============


NET (LOSS) PER SHARE OF COMMON STOCK                        ($0.03)               ($0.03)
                                                    ===============        ==============
                                                         

WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING           57,861,176            57,651,900
                                                    ===============        ==============
                                                           
</TABLE>

     The  accompanying notes to condensed  financial  statements are an integral
part of these statements.
                                       5
<PAGE>

<TABLE>
<CAPTION>


                                                           COPYTELE, INC.
                                                           --------------
                                                   (Development Stage Enterprise)
                                                   ------------------------------
                                            CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
                                            -------------------------------------------
                        FOR THE PERIOD FROM NOVEMBER 5, 1982 (INCEPTION) THROUGH APRIL 30, 1998 (UNAUDITED)
                        -----------------------------------------------------------------------------------


                                                                                                                        Accumulated
                                                                                                                         (Deficit)
                                                                                                    Additional            During
                                                                          Common Stock               Paid-in            Development
                                                                     Shares        Par Value         Capital               Stage
                                                                 -----------------------------   ---------------    ----------------
<S>                                                           <C>              <C>            <C>                 <C> 

BALANCE, November 5, 1982 (inception)                                  -          $     -         $       -           $      -
Sale of common stock, at par, to incorporators on 
 November 8, 1982                                                 1,470,000           14,700              -                  -
Sale of common stock, at $.10 per share, primarily 
 to officers and employees from November 9, 1982 to 
 November 30, 1982                                                  390,000            3,900            35,100               -
Sale of common stock, at $2 per share, in private 
 offering from January 24, 1983 to March 28, 1983                   250,000            2,500           497,500               -
Sale of common stock, at $10 per share, in public 
 offering on October 6, 1983, net of underwriting 
 discounts of $1 per share                                          690,000            6,900         6,203,100               -
Sale of 60,000 warrants to representative of 
 underwriters, at $.001 each, in conjunction with 
 public offering                                                       -                 -                  60               -
Costs incurred in conjunction with private and public
 offerings                                                             -                 -            (362,030)              -
Common stock issued, at $12 per share, upon exercise of
 57,200 warrants from February 5, 1985 to October 16, 1985,
 net of registration costs                                           57,200              572           630,845               -
Proceeds from sales of common stock by individuals from
 January 29, 1985 to October 4, 1985 under agreements 
 with the Company, net of costs incurred by the Company                -                 -             298,745               -
Restatement as of October 31, 1985 for three-for-one 
 stock split                                                      5,714,400           57,144           (57,144)              -
Common stock issued, at $4 per share, upon exercise 
 of 2,800 warrants in December 1985                                   8,400               84            33,516               -
Sale of common stock, at market, to officers on January 9,
 1987 and April 22, 1987 and to members of their immediate
 families on July 28, 1987                                           67,350              674           861,726               -
Restatement as of July 31, 1987 for five-for-four 
 stock split                                                      2,161,735           21,617           (21,617)              -
Fractional share payments in conjunction with five-for-four
 stock split                                                          -                  -              (1,345)              -
Sale of common stock, at market, to members of officers'
 immediate  families from September 10,1987 to
 December 4, 1990 and to officers on October 29, 1987 
 and February 26, 1989                                              628,040            6,280         6,124,031               -
Sale of common stock, at market, to senior
 level personnel on February 26, 1989                                29,850              299           499,689               -
                                                                                                                        
                                                                                                                          Continued
</TABLE>

                                       6
<PAGE>
<TABLE>
<CAPTION>


                                                           COPYTELE, INC.
                                                           --------------
                                                   (Development Stage Enterprise)
                                                   ------------------------------
                                            CONDENSED STATEMENT OF SHAREHOLDERS' EQUITY
                                            -------------------------------------------
                        FOR THE PERIOD FROM NOVEMBER 5, 1982 (INCEPTION) THROUGH APRIL 30, 1998 (UNAUDITED)
                        -----------------------------------------------------------------------------------


                                                             Continued
                                                             ---------



                                                                                                                       Accumulated
                                                                                                                        (Deficit) 
                                                                                                    Additional            During    
                                                                       Common Stock                   Paid-in           Development
                                                                  Shares        Par Value            Capital              Stage
                                                              -----------------------------       ---------------    ---------------
<S>                                                         <C>                 <C>              <C>                 <C>    

Sale of common stock, at market, to unrelated party 
 on February 26, 1989 amended on March 10, 1989                   35,820              358              599,627                -
Restatement as of January 31, 1991 for
 two-for-one stock split                                      11,502,795          115,028             (115,028)               -
Sale of common stock, at market, to members of 
 officers' immediate families from April 26, 1991 to 
 October 27, 1992                                                261,453            2,615            2,788,311                -
Common stock issued upon exercise of warrants by
 members of officers' immediate families on various
 dates from September 1993 through March 1996                    579,800            5,798            2,651,462                -
Common stock issued upon exercise of stock options  
 from December 16, 1992 to June 12, 1996                       4,535,340           45,353           28,197,223                -
Restatement as of June 17, 1996 for two-for-one 
 stock split                                                  28,382,183          283,822             (283,822)               -
Common stock issued upon exercise of warrants by
 members of officers' immediate families on various
 dates in July and October, 1996, and March 1997                 206,610            2,066            1,062,167                -
Common stock issued upon exercise of stock options
 from July 8, 1996 to October 6, 1997 under stock 
 option plans, net of  registration costs                        875,200            8,752            3,042,519                -
Common stock issued upon purchase of equipment                    15,000              150               74,850                -     
Stock options granted to consultants                                 -                 -               179,700                -
Accumulated (deficit) during development stage                       -                 -                  -            ($38,310,842)
                                                            --------------     ------------       ---------------    ---------------
BALANCE, April 30, 1998                                       57,861,176         $578,612          $52,939,185         ($38,310,842)
                                                            ==============     ============      ================    ===============

</TABLE>

     The  accompanying notes to condensed  financial  statements are an integral
part of this statement.

                                       7
<PAGE>

<TABLE>
<CAPTION>
                                                           COPYTELE, INC.
                                                           --------------
                                                   (Development Stage Enterprise)
                                                   ------------------------------
                                           CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                           ----------------------------------------------


                                                                           For the six                         
                                                                          months ended                          For the period from
                                                                            April 30,                             November 5, 1982
                                                          ----------------------------------------------        (inception) through
                                                                  1998                       1997                   April 30, 1998
                                                          --------------------       -------------------     -----------------------
<S>                                                       <C>                        <C>                       <C>    
CASH FLOWS FROM OPERATING ACTIVITIES:
Payments to suppliers, employees and
 consultants                                                  ($4,391,355)               ($5,279,263)              ($45,588,853)
Interest received                                                 319,647                    554,807                  4,576,310
                                                          --------------------       -------------------     -----------------------
Net cash (used in) operating activities                        (4,071,708)                (4,724,456)               (41,012,543)
                                                          --------------------       -------------------     -----------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchases of property and
 equipment                                                       (298,473)                  (364,190)                (2,095,756)
Disbursements to acquire certificates of deposit  
 and marketable securities                                       (972,469)                       -                  (14,018,468)
Proceeds from maturities of investments                           970,808                        -                   13,045,999
Investment made in Joint Venture                                      -                          -                   (1,225,000)
                                                          --------------------       -------------------     -----------------------
Net cash (used in) investing activities                          (300,134)                  (364,190)                (4,293,225)
                                                          --------------------       -------------------     -----------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of common stock and warrants, net of
 underwriting discounts of $690,000 related to initial
 public offering in October 1983                                      -                          -                   17,647,369
Proceeds from exercise of stock options and warrants,
 net of registration disbursements                                    -                    1,398,444                 35,680,358
Proceeds from sales of common stock by
 individuals under agreements with the
Company, net of disbursements made by the Company                     -                          -                      298,745
Disbursements made in conjunction with sales 
 of stock                                                             -                          -                     (362,030)
Fractional share payments in conjunction with 
 stock split                                                          -                          -                       (1,345)
                                                          --------------------       -------------------     -----------------------
Net cash provided by financing activities                             -                    1,398,444                 53,263,097
                                                          --------------------       -------------------     -----------------------

NET (DECREASE) INCREASE IN CASH AND 
  CASH EQUIVALENTS                                              (4,371,842)                (3,690,202)                7,957,329

CASH AND CASH EQUIVALENTS AT 
  BEGINNING OF PERIOD                                           12,329,171                 22,165,892                       -
                                                          --------------------       -------------------     -----------------------

CASH AND CASH EQUIVALENTS AT END OF
  PERIOD                                                        $7,957,329                $18,475,690                $7,957,329
                                                          ====================       ===================     =======================
                                                                                                                          
                                                                                                                          Continued
</TABLE>
                                       8
<PAGE>
<TABLE>
<CAPTION>

                                                           COPYTELE, INC.
                                                           --------------
                                                   (Development Stage Enterprise)
                                                   ------------------------------
                                           CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                           ----------------------------------------------

                                                              Continued
                                                              ---------

                                                                                                           
                                                                          For the six                         
                                                                         months ended                           For the period from
                                                                           April 30,                              November 5, 1982
                                                          --------------------------------------------          (inception) through
                                                                 1998                     1997                     April 30, 1998
                                                          -------------------      -------------------         ---------------------
<S>                                                       <C>                     <C>                         <C>    
RECONCILIATION OF NET (LOSS) TO NET CASH (USED IN)
  OPERATING ACTIVITIES:
Net (loss)                                                    ($3,751,887)             ($2,981,425)                 ($38,310,842)
Stock options granted to consultants                              179,700                     -                          179,700
Pro-rata share of Joint Venture Company 
 losses                                                           207,381                  157,913                       709,215
Depreciation and amortization                                     146,935                  123,329                     1,225,542
Decrease (Increase) in accrued interest
receivable                                                          7,607                   40,523                       (10,822)
Amortization of discount on
marketable securities                                              23,273                     -                           (3,092)
(Increase) in prepaid expenses and other 
 current assets                                                (1,029,735)              (1,764,536)                   (5,883,194)
Decrease (Increase) in other assets                                14,289                   77,686                      (104,877)
Increase (Decrease)  in accounts payable     
 and accrued liabilities related to operating
 activities                                                       130,729                 (377,946)                    1,185,827
                                                          -------------------      -------------------         ---------------------
Net cash (used in) operating activities                       ($4,071,708)             ($4,724,456)                 ($41,012,543)
                                                          ===================      ===================         =====================

</TABLE>

     The  accompanying notes to condensed  financial  statements are an integral
part of these statements.

                                       9

<PAGE>
<TABLE>
<CAPTION>

                                                           COPYTELE, INC.
                                                           --------------
                                                   (Development Stage Enterprise)
                                                   ------------------------------
                                           CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                           ----------------------------------------------

                                                                            For the three months
                                                                               ended April 30,
                                                         ------------------------------------------------------------

                                                                    1998                              1997
                                                          -------------------------          ------------------------
<S>                                                           <C>                              <C>   
CASH FLOWS FROM OPERATING ACTIVITIES:
Payments to suppliers, employees and
consultants                                                      ($2,342,105)                      ($2,354,082)
Interest received                                                    129,540                           253,866
                                                          -------------------------          ------------------------
Net cash (used in) operating activities                           (2,212,565)                       (2,100,216)
                                                          -------------------------          ------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchases of property and
equipment                                                            (44,093)                         (138,537)
Disbursements to acquire certificates of 
 deposit and marketable securities                                  (972,469)                             -
                                                          -------------------------          ------------------------
Net cash (used in) investing activities                           (1,016,562)                         (138,537)
                                                          -------------------------          ------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options and
warrants, net of registration disbursements                             -                            1,168,149
                                                          -------------------------          ------------------------
Net cash provided by financing activities                               -                            1,168,149
                                                          -------------------------          ------------------------

NET (DECREASE) INCREASE IN CASH AND 
 CASH EQUIVALENTS                                                 (3,229,127)                       (1,070,604)

CASH AND CASH EQUIVALENTS AT
 BEGINNING OF PERIOD                                              11,186,456                        19,546,294
                                                          -------------------------          ------------------------

CASH AND CASH EQUIVALENTS AT END OF     
 PERIOD                                                           $7,957,329                       $18,475,690
                                                          =========================          ========================


RECONCILIATION OF NET (LOSS) TO NET 
 CASH (USED IN) OPERATING ACTIVITIES:
Net (loss)                                                        ($1,815,061)                      ($1,610,980)
Pro-rata share of Joint Venture Company losses                         70,802                            88,896
Depreciation and amortization                                          76,117                            60,025
Decrease  in accrued interest receivable                                2,015                               658
Amortization of discount on marketable
 securities                                                            (3,092)                            -
(Increase) in prepaid expenses and  other current 
 assets                                                              (373,309)                         (658,171)
Decrease in other assets                                                  320                            22,463
(Decrease) in accounts payable and accrued 
 liabilities related to operating activities                         (170,357)                           (3,107)
                                                          =========================          ========================
Net cash (used in) operating activities                           ($2,212,565)                      ($2,100,216)
                                                          =========================          ========================
</TABLE>

     The  accompanying notes to condensed  financial  statements are an integral
part of these statements.

                                       10
<PAGE>

                                 COPYTELE, INC.
                                 --------------
                         (Development Stage Enterprise)
                         ------------------------------
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                     ---------------------------------------
                           APRIL 30, 1998 (UNAUDITED)
                           --------------------------

(1)  Summary of significant accounting policies and other disclosures:
     -----------------------------------------------------------------

CopyTele, Inc. (the "Company"), which was incorporated on November 5, 1982, is a
development stage enterprise whose principal activities include the development,
production    and    marketing   of   a   telephone    based    multi-functional
telecommunications  product, called MAGICOM(R) 2000, incorporating the Company's
ultra-high  resolution   E-Paper(TM)  flat  panel  display  technology  and  the
operations of Shanghai  CopyTele  Electronics  Co., Ltd. (the "Joint Venture" or
"SCE"),  the Company's 55% owned joint venture in Shanghai,  China with Shanghai
Instrumentation  and  Electronics  Holding Group  Company  ("SIEC") and Shanghai
International  Trade and Developing Corp.  ("SIT"). As a result of an assignment
by Shanghai Electronic Components Corp., SIEC has acquired a 30% interest in SCE
and SIT's interest increased to 15%. The Company also is continuing its research
and development activities for ultra-high resolution video and color solid state
optical (reflective) and thin film (emissive) flat panel displays.

Reference is made to the October 31, 1997 audited financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the fiscal year
ended October 31, 1997, for more extensive  disclosures  than contained in these
condensed financial statements.

The Company is producing its telephone based multi-functional telecommunications
product, called MAGICOM(R) 2000, incorporating the Company's flat panel display,
called E-Paper(TM),  and associated proprietary hardware and software technology
and  marketing  the  product   through  its  United  States  and   international
distributor/dealer  network. The Company has also developed, in conjunction with
a Japanese company,  a small portable printer called MAGIC PRINTER.  The printer
is being  produced  for the  Company by the  Japanese  company and is also being
marketed through the Company's  marketing  network,  including in China, for use
with MAGICOM(R) 2000 or in conjunction  with personal or laptop  computers.  The
success  and  profitability  of the  Company's  products  will  depend upon many
factors,  including  those normally  associated  with any new product.  See Safe
Harbor  Statement  Under the Private  Securities  Litigation  Reform Act of 1995
contained in  Management's  Discussion  and Analysis of Financial  Condition and
Results  of  Operations  for  discussions   regarding   uncertainties  that  may
significantly  affect the results of  operations,  future  liquidity and capital
resources.

The information contained herein for the six and three month periods ended April
30, 1998 and 1997 and for the period from November 5, 1982  (inception)  through
April 30, 1998 is unaudited,  but in the opinion of the Company, all adjustments
(consisting only of normal recurring adjustments considered necessary for a fair
presentation  of the results of operations for such periods) have been included.
The results of operations for interim  periods may not  necessarily  reflect the
annual operations of the Company.

In March 1997,  the FASB issued  Statement  of  Financial  Accounting  Standards
("SFAS") No. 128, "Earnings Per Share". This statement establishes standards for
computing and presenting earnings per share ("EPS"),  replacing the presentation
of currently required primary EPS with a presentation of Basic EPS. For entities
with complex capital structures, the statement requires the dual presentation of
both Basic EPS and Diluted EPS on the face of the statement of operations. Under
this new  standard,  Basic EPS is  computed  based on  weighted  average  shares
outstanding and excludes any potential dilution;  Diluted EPS reflects potential
dilution from the exercise or conversion of securities  into common stock and is
similar to the currently  required  fully diluted EPS. SFAS 128 is effective for
financial  statements  issued  for  periods  ending  after  December  15,  1997,
including  interim  periods.  The net loss per share  reported by the Company is
only Basic EPS,  as the impact of any  common  stock  equivalents  would have an
anti-dilutive  effect due to the net loss incurred in the period.  The impact of
the  adoption of this  statement  was not  material to  previously  reported EPS
amounts.

The  amounts  due  from  the  Joint  Venture  of  approximately  $4,935,000  and
$4,304,000, respectively, on the accompanying Condensed Balance Sheets represent
parts inventory,  such as the flat panel assembly  components,  purchased by the
Company  on  behalf  of SCE  which are  incorporated  into the  MAGICOM(R)  2000
product.

                                       11
<PAGE>

(2)  Investment in Joint Venture:
     ----------------------------

The Company has  contributed to SCE $1,225,000 in cash, and technology  that has
been valued for purposes of the Joint Venture at $700,000.  SCE does not reflect
the $700,000 in  technology  as an asset or equity  investment  in the condensed
financial  statements  presented  below. The other parties have contributed cash
aggregating  $1,575,000.  The Company has reflected its  investment in SCE under
the equity method of accounting and will  recognize  losses in SCE to the extent
of its cash investment.

Condensed  Balance  Sheets for SCE at April 30,  1998 and  October  31, 1997 and
Condensed  Statements  of  Operations  for the six month periods ended April 30,
1998 and 1997 are as follows:

<TABLE>
<CAPTION>

                           Condensed Balance Sheets                           April 30,                October 31, 
                           -------------------------                            1998                      1997
                                   (Unaudited)                            -----------------       -------------------       
                                                                         
     <S>                                                              <C>                        <C>    
          
        Cash                                                                $     370,789            $     135,890
        Inventories                                                             4,876,368                4,830,461
        Other current assets                                                      156,970                   31,988
        Land occupancy rights, net of amortization; fixed assets,
          net of depreciation and other non-current  assets                     2,192,505                2,197,169
                                                                          -----------------       -------------------
                 Total Assets                                               $   7,596,632            $   7,195,508
                                                                          =================       ===================

        Short term loans                                                    $     999,321            $     500,012
        Accounts payable and accrued liabilities                                  151,816                  504,269
        Due to CopyTele, Inc.                                                   4,934,976                4,303,652
        Capital                                                                 1,510,519                1,887,575
                                                                          =================       ===================
                 Total Liabilities and Capital                              $   7,596,632            $   7,195,508
                                                                          =================       ===================

                                                                                    For the six months ended
                                                                          -------------------------------------------
                       Condensed Statements of Operations                     April 30,                April 30,
                       ----------------------------------                       1998                     1997
                                   (Unaudited)                            -----------------       -------------------   
                                                                          

        Net Sales                                                           $      -                 $     -
        Operating (Loss)                                                         (361,296)                (287,502)
        Other Income (Expense)                                                    (15,760)                     387
                                                                          =================       ===================
                 Net (Loss)                                                     ($377,056)               ($287,115)
                                                                          =================       ===================
</TABLE>

The short-term loans from a Chinese bank bear interest at floating rates,  which
are currently,  approximately  7.69% and 8.64% per annum  adjustable  quarterly.
These loans were  extended in February  and April 1998 and will mature  February
1999 and April  1999,  respectively.  These  loans  are  secured  by a  land-use
contract and building owned by SCE.

Included in accounts  payable and accrued  liabilities  at October 31, 1997,  is
$372,000 of advances  paid by the Company  towards the purchase of products from
SCE. No such advances were outstanding at April 30, 1998.

The cumulative net loss incurred by SCE since its inception on April 10, 1995 is
$1,289,481.

                                       12

<PAGE>

(3)  Stock option plans:
     -------------------

The Company has two stock option  plans,  the Stock Option Plan,  adopted by the
Board of Directors on April 1, 1987 (the "1987 Plan"),  and the  CopyTele,  Inc.
1993 Stock Option Plan, adopted by the Board of Directors on April 28, 1993 (the
"1993 Plan").

SFAS No. 123,  "Accounting for Stock Based Compensation",  encourages,  but does
not require  companies  to record  compensation  cost for  stock-based  employee
compensation  plans at fair value. The Company has chosen to continue to account
for  stock-based   employee   compensation  using  the  intrinsic  value  method
prescribed in Accounting  Principles  Board Opinion ("APB") No. 25,  "Accounting
for Stock Issued to Employees",  and related interpretations.  Compensation cost
for stock options is measured as the excess,  if any, of the quoted market price
of the Company's stock at the date of grant over the amount an employee must pay
to acquire the stock.  In  accordance  with APB Opinion No. 25, no  compensation
cost has been  recognized  by the Company,  as all options  granted to employees
have been made at the fair market  value of the  Company's  stock on the date of
grant.

Had compensation  cost for these plans been determined  consistent with SFAS No.
123, the Company's  net loss and net loss per share would have  increased to the
following pro forma amounts:

<TABLE>
<CAPTION>
                                                            For the Six Months                     For the Six Months
                                                           Ended April 30, 1998                   Ended April 30, 1997
                                                      --------------------------------       -------------------------------
       <S>                                                <C>                                  <C>   

          Net Loss:       As Reported                            ($3,751,887)                           ($2,981,425)
                          Pro Forma                              ($5,771,165)                           ($9,432,417)

          Net Loss
          Per Share:      As Reported                                 ($0.06)                                ($0.05)
                          Pro Forma                                   ($0.10)                                ($0.16)
</TABLE>

Options  granted  to  non-employee  consultants  are  accounted  for  using  the
fair-value method required by SFAS No. 123. Compensation expense for consultants
recognized  in the six months ended April 30, 1998 was  approximately  $180,000,
and is included in general and  administrative  expenses  for the period with an
offset to  Additional  Paid-In  Capital.  No such costs were incurred in the six
month period ended April 30, 1997.

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option  pricing  model  with  the  following   weighted  average
assumptions  used for grants for the six months  ended  April 30, 1998 and 1997,
respectively:  risk free interest  rates of 5.50% and 5.61%;  expected  dividend
yields of 0%;  expected  lives of 2.86 and 2.56 years;  and expected stock price
volatility  of 68% and 69%. The weighted  average fair value of options  granted
under SFAS No. 123 for the six months  ended  April 30,  1998 and 1997 are $1.62
and $ 2.29, respectively.

                                       13
<PAGE>

During the period from  November 1, 1997 to April 30, 1998,  there were no stock
options  exercised,  granted or canceled under the 1987 Plan. At April 30, 1998,
686,160  shares were under  option,  all of which are  exercisable.  The current
weighted average exercise price per share is $4.93.

The  exercise  price with respect to all of the options  granted  under the 1987
Plan  from its  inception  was at least  equal to the fair  market  value of the
underlying common stock on the date of grant. Upon the approval of the 1993 Plan
by the Company's  shareholders  in July 1993, the 1987 Plan was terminated  with
respect to the grant of future options.

The 1993 Plan was  amended as of May 3, 1995 and May 10,  1996 to,  among  other
things,  increase the number of shares of the Company's  Common Stock  available
for  issuance  pursuant to grants  thereunder  from 6 million to 20 million,  as
adjusted  for the  two-for-one  stock split  declared  in May 1996.  Information
regarding  the 1993 Plan from October 31, 1997 to April 30, 1998 is presented in
the table and narrative below:

<TABLE>
<CAPTION>
                                                                                                    Current Weighted
                                                                                                    Average Exercise
                                                                                 Shares             Price Per Share
                                                                                 ------            ------------------
          <S>                                                              <C>                      <C>   

              Shares Under Option at October 31, 1997                           11,540,360               $5.19
                Granted                                                          1,360,000               $3.38
                Canceled                                                          (370,000)              $5.12
                                                                            ------------------
              Shares Under Option at April 30, 1998                             12,530,360               $5.00
                                                                            ==================
              Options Exercisable at April 30, 1998                             10,795,360               $5.20
                                                                            ==================
</TABLE>

The  exercise  price with respect to all of the options  granted  under the 1993
Plan  from its  inception  was at least  equal to the fair  market  value of the
underlying common stock on the grant date. At April 30, 1998,  2,400,000 options
were available for future grants under the 1993 Plan.

From May 1, 1998 through June 5, 1998, the Company received proceeds aggregating
approximately  $28,125  relating to the  exercise of options to purchase  10,000
shares of Common Stock pursuant to the 1993 Plan.

As of June 5, 1998, 12,080,360 of the options to purchase shares of Common Stock
granted and outstanding under the 1993 Plan were exercisable.

(4)  Warrants to purchase common stock:
     ----------------------------------

Warrants  previously  issued by the  Company  were  primarily  to members of the
immediate families of its Chairman of the Board and its President in conjunction
with the sale of its Common Stock.  The exercise price of each warrant was equal
to at least the fair market value of the underlying  common stock on the date of
issuance  of  such  warrant.   At  October  31,  1997,  after   adjustments  for
anti-dilution  provisions  and all  applicable  stock splits,  there were 96,000
shares covered by warrants with a weighted  average  exercise price of $5.07 per
share. During the period from November 1, 1997 to April 30, 1998, these warrants
expired; therefore at April 30, 1998, there were no shares covered by warrants.

                                       14
<PAGE>

            Item 2.  Management's Discussion and Analysis of Financial
                     -------------------------------------------------
                      Condition and Results of Operations.
                      ------------------------------------

The Company is a development  stage enterprise that was incorporated on November
5, 1982.  The Company is  producing  its  products and selling them to end-users
through its  distributor/dealer  network.  Limited sales to end-users  have been
made to date by the distributors  and dealers.  The Company has deferred revenue
recognition  on these  sales  to  distributors  and  dealers  pending  sustained
acceptance  of its products by the  end-users.  Prior to these limited sales the
Company  had no  revenues  from  sales  to  support  its  operations  since  its
inception.   The  Company's   principal   activities  include  the  development,
production    and    marketing   of   a   telephone    based    multi-functional
telecommunications  product, called MAGICOM(R) 2000, incorporating the Company's
ultra-high  resolution   E-Paper(TM)  Flat  Panel  Display  technology  and  the
operations  of SCE, the  Company's  55% owned joint  venture in Shanghai,  China
which is accounted  for under the equity  method of  accounting.  The Company is
also marketing a small  portable  printer called MAGIC PRINTER and is continuing
its research and  development  activities  for ultra-high  resolution  video and
color solid  state  optical  (reflective)  and thin film  (emissive)  flat panel
displays.  There can be no assurance,  however,  that the  Company's  efforts in
these areas will be successful. There is also no assurance that the Company will
generate  significant  revenues in the future,  will have sufficient revenues to
generate  profit or that other products will not be produced by other  companies
that will render the products of the Company or SCE obsolete or unmarketable.

The Company  announced  in  December  of 1997 that it is engaged in  preliminary
discussions with SIEC. The present intentions of the companies as set forth in a
non-binding  letter of intent is to mutually  cooperate to develop,  produce and
market high technology  products,  under mutually  acceptable  terms,  using the
Company's overall flat panel and associated technology.  The parties also intend
to cooperate to mutually  market certain of SIEC's  products,  to be enhanced by
the  Company's  technology,  outside  of  China.  In  order  to  share  in their
respective  efforts,  the  companies  are  attempting to devise and agree upon a
means to share an interest in each other's company. It is presently contemplated
that the Company  would issue common stock in an amount  representing  less than
20% of its  currently  outstanding  shares in exchange for an interest in SIEC's
holdings.  The  companies  are in  discussions  concerning  the  details of this
possible arrangement including issues such as the type of products that would be
considered for  development,  the method of  development,  technology  licensing
requirements where applicable, possible locations for the production of products
and certain aspects of an international  co-marketing agreement. There can be no
assurance  that  the  parties  will be able to  arrive  at  mutually  acceptable
agreements or obtain the requisite governmental  approvals.  Among the issues to
be finalized are those concerning the valuation of CopyTele's  shares, the form,
structure  and  valuation  of the  interest  in SIEC's  holdings  that  would be
exchanged for CopyTele's  shares,  the nature and structure of the venture,  the
specific  products  to be  developed  for  sale  and the  likely  timetable  for
implementing the venture. 

In reviewing  Management's  Discussion  and Analysis of Financial  Condition and
Results of Operations,  reference is made to the Company's  condensed  financial
statements and the notes thereto.

Safe Harbor  Statement  Under the Private  Securities  Litigation  Reform Act
-----------------------------------------------------------------------------
of 1995.  
-------- 

Certain   statements  in  this   Quarterly   Report  on  Form  10-Q   constitute
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown  risks,  uncertainties  and other  factors  which  may cause the  actual
results,  performance or achievements of the Company to be materially  different
from any future  results,  performance or  achievements  expressed or implied by
such  forward-looking  statements.  Such  factors  include,  among  others,  the
following:  production  capability by SCE and the Japanese company of MAGICOM(R)
2000 and MAGIC PRINTER,  respectively;  long-term  product  performance  and the
capability of the Company,  SCE, its  distributors and its dealers to adequately
service  the  Company's  products;  the ability of  distributors  and dealers to
market their contracted quantities of the Company's products in their respective
territories;  the ability of the Company and SCE to obtain all required  foreign
governmental  approvals;  the  volatility of foreign  currency  exchange  rates;
political  and economic  stability in targeted  marketing  territories;  and the
possible  development  of  competitive  products that could render the Company's
product  obsolete or  unmarketable.  See  "Business" and Note 1 to the Company's
Financial  Statements  contained in the Company's Annual Report on Form 10-K for
the fiscal year ended October 31, 1997 for discussions  regarding  uncertainties
that may  significantly  affect the results of operations,  future liquidity and
capital resources.

                                       15

<PAGE>

Results of Operations
---------------------

Selling,  general and administrative  expenses,  including the loss from SCE for
the six month  periods  ended  April 30, 1998 and 1997  increased  approximately
$545,000   to   approximately   $4,041,000   in  the  fiscal  1998  period  from
approximately  $3,496,000  in the fiscal 1997 period.  Included in these amounts
are  research,  development  and  tooling  costs,  as well as  normal  operating
expenses,  of  approximately  $2,106,000  and $2,021,000 for the fiscal 1998 and
1997  periods,  respectively.  Selling,  general  and  administrative  expenses,
including the loss from SCE for the three month periods ended April 30, 1998 and
1997 increased  approximately $82,000 to approximately  $1,946,000 in the fiscal
1998 period from approximately $1,864,000 in the fiscal 1997 period. Included in
these amounts are research,  development  and tooling  costs,  as well as normal
operating  expenses,  of approximately  $1,006,000 and $1,123,000 for the fiscal
1998 and 1997 periods,  respectively.  From November 5, 1982 (inception) through
April 30, 1998, selling, general and administrative expenses, including the loss
from SCE were approximately  $42,901,000 including approximately $26,491,000 for
research, development and tooling costs, as well as normal operating expenses.

The increases resulted primarily from increases in expenses for salaries, losses
from joint venture operations, costs associated with stock based compensation to
consultants,  professional fees, engineering costs, travel costs and to a lesser
extent,  communication  costs and rents.  Salaries  increased in the fiscal 1998
periods over the comparable fiscal 1997 periods as a result of hiring additional
marketing and engineering personnel.  Marketing related costs, including travel,
increased in the current periods as higher travel related costs were incurred in
connection with meeting with prospective  dealers and distributors.  Engineering
supplies decreased primarily as a result of reduced purchases of panels and chip
drivers used for testing and evaluation  purposes,  and the reduced purchases of
MAGICOM(R)  2000 units from SCE for similar  purposes.  The  decrease was offset
somewhat by the cost to implement engineering changes to MAGICOM(R) 2000 and the
related  cost to eliminate  obsolete  components  as a result of these  changes.
Research  and  development  costs  increased  as a result of costs  incurred  in
connection with  development of the Company's  solid state optical  (reflective)
and thin film (emissive) flat panel display programs.

Professional fees increased in the aggregate during the fiscal 1998 periods over
the  comparable  fiscal 1997 periods as a result of higher legal and  accounting
expenses associated with the Joint Venture and the Company's potential agreement
with SIEC.  Telecommunication  costs and rents increased to a lesser extent over
the prior  year's  periods as  compared to other cost  increases.  A decrease in
workers' compensation costs was offset by an increase in pension and other group
insurance cost as a result of the addition of new personnel.  A non-cash expense
of  approximately  $180,000 was charged to earnings  during the six month fiscal
1998  period  for stock  based  compensation  to  consultants  with an offset to
Additional Paid-In Capital.

The Company's  portion of SCE's loss increased during the six month period ended
April  30,  1998  by  approximately  $49,000  to  approximately   $207,000  from
approximately $158,000 in the fiscal 1997 period. The increase was the result of
manufacturing  costs being absorbed over a limited quantity of product produced,
costs incurred in connection  with the  implementation  of a quality  management
program and initial  marketing  costs. The loss decreased during the three month
period ended April 30, 1998 by approximately  $18,000 to  approximately  $71,000
from approximately $89,000 in the fiscal 1997 period.

While there are no formal  agreements,  the Company's  Chairman of the Board and
its  President  have  waived  salary  and  related   pension   benefits  for  an
undetermined  period of time commencing  November 1985. Four other  individuals,
including  an officer and three  senior level  personnel,  then  employed at the
Company,  waived salary and related  pension  benefits from January 1987 through
December 1990.  While there are no formal  agreements,  commencing  January 1991
these individuals waived such rights for an undetermined period of time and they
did not receive salary or related pension  benefits  through  December 1992. The
Company's  Chairman  of the Board,  its  President  and the three  senior  level
personnel  continued  to waive such  rights  commencing  in January  1993 for an
undetermined  period of time.  Since February  1993, one additional  employee is
also currently waiving such salary and benefit rights for an undetermined period
of time.

The decrease in interest  income of  approximately  $226,000 and $123,000 during
the six and three months ended April 30, 1998 as compared to the same periods in
1997  resulted  primarily  from  a  decrease  in  average  funds  available  for
investment offset slightly by an increase in interest rates. Funds available for
investment  during the six month  periods  ended April 30,  1998 and 1997,  on a
monthly weighted average basis, were approximately  $10,427,000 and $19,650,000,
respectively.  For the three month periods ended April 30, 1998 and 1997,  funds
available  for  investment,   on  a  monthly   weighted   average  basis,   were
approximately   $9,477,000   and   19,090,000,   respectively.   The  investment
instruments  selected by the Company are  principally  money market accounts and
commercial paper.

                                       16

<PAGE>

Liquidity and Capital Resources
-------------------------------

Since its inception,  the Company has met its liquidity and capital  expenditure
needs  primarily  from the  proceeds of sales of its common stock in its initial
public  offering,  in private  placements,  upon exercise of warrants  issued in
connection with the private placements and public offering, upon the exercise of
stock options  pursuant to the 1987 Plan and the 1993 Plan and recently from the
sale of its products.

From May 1, 1998 to June 5, 1998,  the  Company  received  proceeds  aggregating
approximately  $28,000  relating to the  exercise of options to purchase  10,000
shares of Common Stock under the 1993 Plan.

Working  capital  decreased  by  approximately   $3,278,000  from  approximately
$16,990,000 at October 31, 1997 to  approximately  $13,712,000 at April 30, 1998
primarily as a result of the loss incurred for the period.

SCE required an initial  aggregate  capital  investment of  $3,500,000  from the
parties  to the joint  venture.  The Joint  Venture  Agreement  contemplates  an
additional  $3,500,000  investment,  which may be borrowed from banks,  of which
approximately  $1,000,000 has been borrowed to date. The Company has contributed
$1,225,000 in cash, and  technology  valued for the purposes of SCE at $700,000,
and the other parties have  contributed  $1,575,000 in cash to SCE. (See Notes 1
and  2 to  the  Company's  condensed  financial  statements.)  SCE  may  require
additional  capitalization  of up to a total of $25 million,  depending upon the
nature and extent of its business activities. The Company currently has no plans
with respect to additional financing.

There can be no assurance  that adequate  funds will be available to the Company
or SCE, including any future capital contributions, if any, beyond the Company's
initial capital  contributions of $1,225,000 to SCE, or that, if available,  the
Company  and SCE will be able to  obtain  such  funds  on  favorable  terms  and
conditions.

The Company believes that without taking into  consideration  potential revenues
from  sales of  MAGICOM(R)  2000 it will have  sufficient  funds  into the first
quarter of fiscal 2000 to maintain  its present  level of  development  efforts.
This includes,  among other things,  the collection of the amounts due from SCE,
but  excludes  cash  expenditures  that  may  be  required  with  the  potential
transaction  with SIEC. The amounts due from SCE are primarily  costs related to
the  purchase  of  components  for SCE's use in  MAGICOM(R)  2000  units.  It is
expected that SCE will pay the Company during the current year through the sales
of units and financing from banks,  although the amounts due may increase before
repayment begins.

The Company's estimated funding capacity indicated above assumes, although there
is no assurance,  that the waiver of salary and pension benefits by the Chairman
of the Board,  the  President  and senior level  personnel  will  continue.  The
Company anticipates that it may require additional funds in order to participate
in SCE following its initial capital  contributions and to continue its research
and development activities.

                                       17

<PAGE>


Item 6.           Exhibits and Reports on Form 8-K.
                  ---------------------------------

                  (a)      Exhibits
                           --------

                           27 - Financial Data Schedule

                  (b)      Reports on Form 8-K.
                           --------------------

                           No  reports  on Form 8-K were  filed for the  Company
                           during the quarter ended April 30, 1998.


    
                                      18


<PAGE>

                                   SIGNATURES
                                   ----------

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                        CopyTele, Inc.



                                        DENIS A. KRUSOS
                                        ---------------
                                        Denis A. Krusos
                                        Chairman of the Board,
                                        Chief Executive Officer
                                        and Director (Principal Executive
June 15, 1998                           Officer)

                                        FRANK J. DISANTO
                                        ----------------
                                        Frank J. DiSanto
June 15 , 1998                          President and Director

                                        GERALD J. BENTIVEGNA
                                        --------------------
                                        Gerald J. Bentivegna
                                        Vice President - Finance,
                                        Chief Financial Officer and
                                        Director (Principal Financial
June 15 , 1998                          and Accounting Officer)


                                       19

<PAGE>